Congratulations! On buying your new home, probably if you are buying your home for the very first time you might be confused about whether to go for stamp duty land tax or not? This might be one of those larger expenses that can empty your pockets.
While buying a house in the UK, it requires you to take the stamp duty land tax that can drill your pocket and has a certain threshold. The stamp duty land tax is directly proportional to the price of the property. These expenses can be handled efficiently by estate agents in UK.
There are certain terms and conditions for buying the stamp duty land tax according to the government. Depending on your location your stamp duty land tax will differ. While purchasing stamp duty land tax it is important to understand the functionality of stamp duty land tax.
How Can Stamp Duty Be Defined?
Stamp duty land taxes are those legal taxes, recorded by the government when the transfer of property takes place. Stamp duty is also known as government imposed stamp tax that needs to be paid when a property is brought to the UK, for residential purposes. There are different norms for paying stamp taxes, it is directly proportional to the purchase price. Different rules govern different buyers, depending either first or second.
Who Are first-time buyers?
Ok, so now you are stressing over what are first-time buyers? We got you. First-time buyers implies to those buyers who have never owned or inherited a piece of land or property earlier or a deed has never been signed on their name.
There are several norms to be recognised for first-time buyers. If you are married and your partner has bought a property then you won’t be recognised as a first-time buyer even if the property was not signed in your name. The rules change if you are not married but you are in a live-in relationship, and in that case, if your partner owns a property but you don’t then you will be recognised as a first-time buyer.
Another guideline that needs to be followed to let property is that first-time buyer rules don’t imply it. You are allowed to rent out your home, even if you haven’t purchased a property before.
Is Adding Stamp Duty To Your Mortgage A Good Idea?
Can stamp duty be added to the mortgage? Absolutely! Will it be beneficial? Absolutely not. Let us explain to you how adding stamp duty to your mortgage may harm you.
Adding stamp duty to your mortgage will add up those extra interest to your bills that can drill your pocket. It doesn’t make any sense to pay those extra piles of money on stamp duty, so it is not a good idea to add stamp duty to your mortgage.
Usually, a mortgage is taken for a longer period of time and if you add on your stamp duty to your mortgage, you will end up paying more for several years. Eventually, it will also hamper your loan ratio and credit score.
When It Becomes Essential To Pay Stamp Duty?
Almost done with all the bits and bytes of legalities, now you be curious to unlock your new house. Wait a minute, when to pay stamp duty is still dragging you back. Stamp duty should be paid within 14-30 days of purchase, depending upon the location, in order to take your keys.
If the stamp duty is not paid within this time frame then a certain rate of penalty is charged along with the original amount.
Steps Evolved To Pay Stamp Duty
Hiring a solicitor in this scenario can bear you several headaches in paying taxes. Usually, your solicitor will pay the stamp duty on your behalf and will include them in their consulting fees. They will also help you with exemptions if any. Your solicitor will help you in identifying whether or not you will qualify for the first time buyer category. However, it is always better to be safe than to be sorry. Instead of just closing your eyes on solicitors, keep yourself checked with your taxes. Always make sure that you know what is going around you, and what your solicitor is doing, and ask them questions. Even if you don’t understand certain terms and conditions of tax, calmly ask them to explain them to you.
It is always a better idea to get yourself checked than regret it later on.
Added Advantages Of First-Time Buyers
There are certain plans imposed by the government to help you with your buying options. Purchasing a home can be a sound investment, and you should maximise all the benefits that the government imposes on you.
After the pandemic, the government has come up with several schemes to boost the entire market. Although the market has boomed and flourished after a certain leap. First-time buyers can benefit from certain taxation plans that can work in their favour to lower their tax rate and can also increase their loan ratio which will help them in further loans.
Purchasing a home can be one thing and fulfilling all your responsibilities while purchasing them is another. Whenever purchasing a home for yourself, always ensure to check yourself with the legal terms and conditions. Don’t step barefooted, without any knowledge as it can lead you to pitfalls. It is always a good idea to take help from peers and do extensive research for yourself.
Stamp duty is an essential legal formality that needs to be done while purchasing a home for yourself.